How surprising. It is Monday, and on the editorial pages of the Washington Post, constant critic of Social Security, Robert J. Samuelson is yet again calling for "some benefit cuts or tax increases, though unpopular...Gradual increases in eligibility ages, starting now, would similarly represent a common-sense adjustment to a graying society." This is the sort of thing Dean Baker usually roasts him over, but Beat the Press seems inaccessible today, so I guess I shall have to do the beating.
While this is just par for the course for RJS, today's twist involves emphasizing how there ought to be generational warfare going on, but for strange reasons it does not seem to be happening. He quotes the ridiculous column by WaPo's new economics columnist/blogger, Jim Tankersley, whom several of us bashed pretty hard, but with RJS apparently unaware that his column has pretty much been torn to shreds by everybody who has commented on it and does not write for WaPo. (My critique of it can be found here.)
Another new twist is that while Samuelson has long claimed to be a boomer while bashing the boomers and calling for benefit cuts for them, he finally outs himself as having been born in 1945, the last year of the Silent Generation, just before the front end of the boomers. This is actually kind of funny because in that special Outlook section of WaPo where Tankersley's silly piece appeared there was a discussion about how many Silents identify themselves as boomers. Weird.
So part of the claim by Silent Samuelson and Gen-Xer Tankersley is that the boomers were "born into some of the strongest job growth in the history of the US." Unfortunately for them, that is not as true as claimed. The strongest job growth period was the Golden Age of 1945-1973, which only the front end of the boomers managed to get into a little bit of. Since then job growth has been less dramatic, and median real wages have barely moved. The people who really got the benefits of that Golden Age were the later stage Greatest Generation and most dramatically the Silent Generation, Samuelson's generation. So when he brags in this column today about how he "saved adequately for retirement," well, whoop-de-doo! He is a Silent, the real ripoff generation. But he does not call for them to pay anything. It is those spoiled rotten boomers who must pay, without him saying a word about how the Greenspan Commisson of 1983 already imposed the retirement age increases he calls for as well as a pretty hefty tax increase so that the boomers would "pay for their retirement."
What is really weird is that while he seems to think that introducing more gradual increases in eligible retirement age will somehow make the current or even boomer elderly pay more, it is those future generations who will get hardest by such increases, the hapless Gen Xers as well as the millennials. Maybe the millennials have figured this out, although with half of them reportedly thinking that they will get nothing from Social Security, I remain highly doubtful about their level of economic knowledge. They have been bamboozled by the relentless propaganda emanating from the likes of Silent Samuelson.
I will give RJS credit for an insight he makes in the later part of his column. While accurately noting that indeed many millennials are currently hurting with the recent bad economy and student debts and so on, he notes that they also seem to be optimistic about their future prospects. He finally puts it together that one reason they might be so is indeed this awful wave of retirements of boomers that he mostly rants about as awful: those retirements will open up a lot of opportunities for not only more jobs but also promotions for the millennials. Not all is lost for the millennials, and Silent Samuelson sort of admits it, even if he wants to hit them with all these retirement age increases, which maybe they are not looking forward to having implemented.
Barkley Rosser
Overall there should be no SS funding problem: per capita income doubles twice as fast as population. Eg., 1967 per capita $15,000; pop 200 million -- 2014 per capita $30,000 -- pop 325 million.
ReplyDeleteCaveat: all the growth going to folks who don't pay much FICA. Better start pushing for rebuilding union density RJS. :-)
The biggest problem for the intergenerational warfare folks (and RJS is just one of many) is that their argument is aging right along side its villains. The general outlines of Intergenerational Warfare were outined in Butler and Germanis's 1983 article "Leninist Strategy" and can be reduced to three lines:
ReplyDeleteReassure the Olds
Scare the Youngs
Blame the Boomers
Which is why almost every single Republican (and Third Way/Bipartisany) plan to 'reform' Social Security carves out an exemption for those "in and approaching retirement" and generally defining that at "55 and older". This worked great at inception in 1983 when "55 and older" meant folks born in 1928 and earlier (Greatest Generation) and still worked okay closer to 2000 when that mean people born in 1945 and earlier (Silents). In 1983 and 2000 it was possible to align the villains of the piece and Boomers.
But time and the tide wait for no man. Even RJS. In 2015 the whole "55 and older" group are those born in 1960 and earlier and so take in the vast majorty of Boomers. Now Republican plans are reduced to the absurdity of arguing "Booomer fucked up everything! So lets give them a pass and fuck over Millennials!!". And expect the latter to not only accept that but imagine they are sriking a blow for intergenerational justice.
Doesn't work. The Leninist Stragegy has aged out. Because that nice tri-partite argument simply breaks down once the equation shifts to Boomers = Olds.
(And not to pat my myself on the back so hard that I dislocate my shoulder this is always why I have pushed the plan of "Nothing" as a response to SocSec "reform'. Time was always on my side)
Unsurprisingly I am in complete agreement, Bruce. Even a decade ago when I was formulating "Rosser's Equation" about this, my concern was not about "getting mine." I figured there was no way the political system would end up not letting me have "mine." My concern was to preserve SS benefits for my children and especially for my grandchildren, the first of whom was born the previous year,
ReplyDeleteI kind of suggested at the end of my post that the millennials do not strongly support benefit reductions because they have figured it out that these will be for them, not for the boomers. But I suspect that it not the case given that Pew finds that half of them expect to get no benefits at all, which is simply ridiculous. If this latter outcome comes to pass (or more likely they face some sharp reduction of still positive benefits), it will not be due to either demographic or economic (or even social) reasons, but because they let themselves get hornswaggled by politicians telling them all these fantasy stories and convincing them that, as I and others have put it many times, "they should expect cuts in future benefits now because otherwise they might have cuts in future benefits in the future."
"Maybe the millennials have figured this out, although with half of them reportedly thinking that they will get nothing from Social Security, I remain highly doubtful about their level of economic knowledge. "
ReplyDeleteOh, the millenials know well enough that there's no actual funding problem for Social Security under the current rules.
They also know, however, that sooner or later - certainly by the time they reach retirement age - the Republicans will have won out and destroyed the program.
Economically there's no problem. *Politically*, however, Social Security is doomed, despite its popularity.
"They also know, however, that sooner or later - certainly by the time they reach retirement age - the Republicans will have won out and destroyed the program."
ReplyDeleteIf they're smart enough to know that Republicans are intent on destroying a significant part of their own retirement financial security, why are they not smart enough to vote the scum out of control of Congress. A big part of this country's political problem is that only a third of eligible voters turn out to vote. And I suspect that those who vote their fears and prejudices turn out in higher numbers than those who vote their own economic best interests.
Oh, Barkley, thanks for reminding me that I'm a Silent Generationalist and not a Baby Boomer. Now I feel a sense of relief at not being responsible for all of the economic problems of the Millennials. BTW, it's not generations that are the root of the economic problems of the working class. That distinction goes to the One Percenters and their sycophants within the political class.
ReplyDeleteJack,
ReplyDeleteIn case it was not clear, although I dumped all over RJS for his Silent status, I am not at all a fan of this generational warfare schtick that is so popular now. Indeed, this post is if anything a slam at Samuelson's outright call for generational warfare, a phrase he actually used in the article approvingly.
It turns out that Dean Baker has posted on this article also, and he makes the point you do, that RJS is just trying to distract younger people from the massive redistributions that have gone on towards the top groups, with the outcome that they are looking at earning far lower wages than they might otherwise, along with many of the other problems that they face.
Perhaps it is the problem of "the massive redistributions that have gone on towards the top groups" that has created the drive to cut social security to vast numbers of people.
ReplyDeleteFor, if the aged pension is denied, the only option (for many) is to sell one's assets to try and survive. When there's a class of extremely wealthy individuals sitting in prey waiting for these assets to be forcibly put on the market.
My father-in-law has unwittingly become a millionaire simply by continuing to live in his simple and basic 3 bedroom house in Sydney. Some media people consider it a crime against society for an elderly gentleman to be taking up an entire house and backyard purely for his own convenience. This 'problem' can be solved by including the family home in the aged pension asset test, thus denying this man an income, and thereby forcing the sale of his house to create a new flow of funds to survive on. He can, they say, downscale into a small unit and live it up on the cash difference (in his mid nineties).
The logic of the market trumps again. 'Market' for whom?
But there does seem to be a demographic problem. Quoting from the SSA's Office of Policy: "Today 12 percent of the total population is aged 65 or older, but by 2080, it will be 23 percent. At the same time, the working-age population is shrinking from 60 percent today to a projected 54 percent in 2080. Consequently, the Social Security system is experiencing a declining worker-to-beneficiary ratio, which will fall from 3.3 in 2005 to 2.1 in 2040 (the year in which the Social Security trust fund is projected to be exhausted)." The only way around this I can see is to let in large numbers of young immigrants.
ReplyDelete@Alan G. Isaac -- I don't get your point. Do you think the ration of workers to retirees is going to cause the government to default on its bonds? In its earliest days SS was a "pay as you go" scheme because they started from scratch. Since 1983 it has gradually converted to a fully funded annuity scheme, although there are some current problems with current funding to top up the trust fund. Current workers do not pay for the benefits retirees receive. Current workers are not "supporting" retirees. Retirees are not a "burden" on current workers. This is an utterly false red herring propagated by the one percenters.
ReplyDeleteAlan,
ReplyDeleteOf the high income nations the US has about as good demographics as any, with higher rates of pop growth, although we have slowed during the Great Recession. As it is, I read these hysterical accounts of how today we have 3 workers per retiree but by 2030 or so we shall have only 2 to 1, help help help!
Well, quite a few high income nations already have that ratio we shall have in 2030 and are currently paying their pensioneers just fine, some of them with greater life expectancies and earlier retirement ages than we have. I note in this regard Germany, often put up as a virtuous example we should be emulating, and seriously demographically challenged Japan. Now in the latter while payments are being made, they are freaking out. But then they have an actually declining population along with the greatest life expectancy and a normal retirement age of 55.
Really, I do not think the US is in any real danger of some massive crisis over this, despite the relentless carryings-on of the VSPs like Silent Samuelson and his ilk. Needless to say, they never notice these international comparisons, so busy are they convincing the poor ignorant millennials that they will get no SS benefits at all and should engage in generational warfare over this.
Alan G I could quibble some with the numbers you cite (say by pointing out the hyperfocus on worker/beneficiary rather than the worker/dependent ratio gives misleading implications) but instead want to quote this and ask a question:
ReplyDelete" The only way around this I can see is to let in large numbers of young immigrants."
And this is a problem why? Wasn't America built by admitting waves of largely young immigrants? Because the answers tend to approach various strands of nativism. For example you see this very explicitly in Japan and Italy where the last decades have had the double discourse of aging populations/immigration barriers to preserve "culture".
Of course, the push to reduce or eliminate social security is happening at the very time when (as the news headlines say here) 60% of workers will be replaced with new technology by 2025. The byproduct of this 'efficiency' and 'productivity' is the superfluous person who can only consume.
ReplyDeleteBruce,
ReplyDeleteItaly, while whining about it, is receiving immigrants, which has their population roughly stable. OTOH, Japan has a very vigorous anti-immigrant policy, which has resulted in them having an actually declining population over the past decade.
Bruce, I did not suggest an immigrant inflow was a problem. I suggested it as a potential solution to a problem.
ReplyDeleteBarkley, I did not suggest a crisis was lurking, and I don't think there is. But the demographics do pose modest challenges, which I believe should not be ignored.
Roger, You are misinformed. Social Security is still essentially pay as you go. Moving from a pay as you go system to a funded system is very difficult.
One final comment: a key political economic problem is the social security system is that it mixes together three very different goals: retirement security via forced saving, insurance against unexpectedly long life or low income, and income redistribution. I believe a lot of the political legitimacy of the system comes from a belief that Social Security payouts are mostly a return of forced saving. This means that pushing for a larger redistributional component creates political risk for the system.
Barkley, I agree with you wholeheartedly regarding inter-generational squabbling, as it is described by too many media and political actors. I was being a bit sarcastic in my previous comment.
ReplyDeleteAlso, it might be a good idea to boot Mr. Vijah and his ad, above. Unless you're cool with providing free advertising space in your comments sections.
And, I see much of any Social Security funding issues as a direct result of the constant push for ever lower average wages and ever greater income disparity. If lower paid workers were receiving a better share of the economic rewards they would be contributing a higher amount of FICA. Problem solved in that case.
Jack,
ReplyDeleteSorry, but I do not manage the site and I frankly do not know how to delete a post, although I do not like it when these advertisers come in and post their garbage.
They are right, though, that boomers like me were "born into some of the strongest job growth in the history of the US." Thing is, we damned boomers were so lazy we just didn't get jobs as soon as we could walk. Personally, I didn't work much my entire childhood, other than a koolaid stand or two.
ReplyDeleteBarkley,
ReplyDeleteGoogle says you can delete comments like this:
https://support.google.com/blogger/answer/42398?hl=en
fwiw
Alan's link is for deleting one's own comments. This link is for setting the blog as one which can be moderated, https://support.google.com/blogger/answer/42537. I've forgotten who it is that actually is the primary "administrator" of Econospeak.
ReplyDeleteTo delete spam comments, just go to the "published comments" section of econospeak and hover your mouse pointer below the comment "Remove content | Delete | Spam" will appear in blue. Click on Spam and the comment is gone.
ReplyDelete